Empire Manufacturing Starts Off The Year Slow

Manufacturing in the state of New York started off the year on a slow note as the January Empire Manufacturing report came in weaker than expected (-7.8 vs. 0.0) this morning. This is now the sixth month in a row where this indicator has been below zero. The table to the right lists the current conditions as well as the outlook six months out for the headline index and each of the index's subcomponents. As shown, this month's report was weak across the board. The only two components that were above zero were Prices Paid and Prices Received. Looking out six months from now, manufacturers in New York are a lot more optimistic (not surprisingly), as none of the components are below zero.

The top chart below shows the General Business Index of the Empire Manufacturing index for current conditions and six months out. Interestingly, even as the current conditions component has been declining, the outlook six months out has been improving. The current spread between the two indices is the widest it has been since April 2012. Let's hope that manufacturers are not getting overly optimistic and actually have reason to be more optimistic.

The second chart below shows the outlook for capital expenditures and technology spending over the next six months. As shown, both indices have been in multi-month downtrends. In fact, the outlook for capital expenditures (4.3) is the lowest since July 2009.

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